The State Government today announced a strategic review of Forestry Tasmania to help the business adapt to the rapidly changing forest industry.

The Premier and Treasurer, Lara Giddings, said tenders would be sought this weekend for organisations to undertake an independent review of the Government Business Enterprise and provide recommendations on potential future structures, governance and business models.

“Forestry Tasmania is an integral part of our timber industry, which means that as the industry adapts to changes in world markets and forest practices, the business must also adapt for the future,” Ms Giddings said.

Ms Giddings said the review would be run in parallel to the ongoing discussions in the Statement of Principles process.

“This review is an important part of the transition process we are currently in, to ensure the forest industry can remain sustainable and provide jobs to regional communities into the long-term.

“Regardless of whether agreement can be reached in the Statement of Principles process, we recognise that inevitable changes in the industry, driven by market forces, will have a significant impact on the current operations of Forestry Tasmania.”

The Minister for Energy and Resources, Bryan Green, said the forest business had been exposed to significant international and domestic market volatility in recent years.

“Over the past few years, Forestry Tasmania has been adversely affected by the large decline in the market for export pulpwood, exacerbated by the severe contraction in the Japanese economy and the recent strength of the Australian dollar.

“This review is about ensuring that we have the best business model to deal with these challenges into the future.

“Throughout this process, our focus will be on maintaining a strong and viable forest sector that maximises job opportunities for Tasmanians.”

Expressions of interest from suitably capable and experienced organisations to undertake the independent strategic review will be sought through an open tender process, to be advertised this weekend.

The Tasmanian Greens today welcomed the announcement that an independent Strategic Review of Forestry Tasmania is to be conducted, with tender advertisements expected in the weekend papers, saying that it is long-overdue.

Greens Leader Nick McKim MP said that the Greens have been calling for Forestry Tasmania to be reviewed over the last decade due to ongoing concerns over its flawed business model, poor financial record, and lack of accountability.

“The announced Strategic Review of Forestry Tasmania is long-overdue, and it is also a significant win for many conservationists and the Greens who have been calling for over a decade for an investigation into this GBE’s brief and operations,” Mr McKim said.

“We have been raising ongoing and serious concerns about the inherent contradictions within Forestry Tasmania’s operations which have lead to bad outcomes for our unique native forests, as well as poor financial outcomes for local industry and the state coffers.”

“A recent report commissioned by Our Common Ground found that the actual return to the state by Forestry Tasmania has been zero for three of the last four years, and was only $1.3 million in the year in which it was positive.” [1]

“Significantly this announced Review’s Terms of Reference also requires the current structures and governance frameworks to be evaluated, especially in the context of moving towards a restructured and viable timber industry.”

“The Greens would encourage the successful tenderer to ensure that the community and stakeholders will be provided an opportunity to have input into this long-awaited review,” Mr McKim said.

About time! See? This wasn’t so hard and it hasn’t hurt a bit to join the rest of the world in the 21st century. It is still time to remove the senior executive (who were, generally, political appointments anyway) and recruit the next generation of management.

Posted by Mark on 13/05/11 at 05:37 PM

KPMG

Posted by john hawkins on 13/05/11 at 05:58 PM

Clearly, the first thing to do is to show all the FT bosses the door.

They have turned a small (on a world scale),high quality (on a world scale) resource into a small, low quality resource.

As Saul Eslake has been saying for years, (paraphrasing here) Tasmania’s future does not lie in supplying undifferentiated commodities - which is exactly where we are going.

Out with the lot of them - with no time to even clear their desks.

Posted by John Maddock on 13/05/11 at 06:11 PM

Lara….no need to outsource the task….your new Education minister and his green advisers have all the answers… Haven’t you been listening ?? they know everything !

Posted by Max on 13/05/11 at 06:22 PM

Get FT’s tourism outfit back to Tourism Tasmania. Declare all senior positions vacant. No more gbe but department controlled.

But beware, it could be a new broom or it could be used to entrench the status quo, superficial change only. Mr Gordon still claims ‘business as usual’.

The use of the word ‘independent’ still worries me as the Premier still regards Mr Kelty’s work as ‘independent’. KPMG sounds good and we shall await the terms of reference. Maybe FT will be engaged to build the mill? Party political membership should be an automatic dis qualifier. Let’s get the real forestry expertise back to real forestry work.

Posted by russell on 13/05/11 at 06:53 PM

Are you fair dinkum?

The sherangs of this giant debacle are on mega dollars to run this show and they need someone to hold their hand and navigate the murky waters?

Im speechless!!!!

Posted by Dave Groves on 13/05/11 at 07:01 PM

Max. You are possibly right, the Greens have the only experienced sawmiller, the only person that tried to keep the Scottsdale sawmills working and employing redundant workers. Kim Booth is the only person possibly in Australian politics who has the qualifications to understand and turn around the forest industry in Tasmania. Will he get a Guernsey, not likely he is a Green.
If Lara wants to have a viable forest industry then she could do no better than to form a strategic review headed by Green Kim Booth, Ruth Forester MLC and advise from Frank Strie (master forester) This will not happen as Lara would have to put the future of Tasmania over party politics.

Posted by max on 13/05/11 at 07:08 PM

Max,
I love your work and agree totally.Lara must make sure that the grand puppeteer, the CFPO Graham Wilkinson and his fawning flock, are included in the strategic review, to ensure that the incredulous “self regulation” regime is forever discredited.

Posted by lewis on 13/05/11 at 07:33 PM

Who is adjudicating the tenderers? Bill Kelty?
Michael Swanton.

Posted by Michael Swanton on 13/05/11 at 08:02 PM

Definition of Strategic Review.

How can we get more subsidies?

Posted by Pete Godfrey on 13/05/11 at 08:20 PM

Shuffling the deck chairs on the Titanic, it seems.

Lara: “And for my next trick: A review!”

Maaate, Comrade.. Nick.. it’s not an investigation - it’s a private ‘review’. Any findings contrary to the Tas Inc agenda will quickly go into the “Commercial-in-Confidence” shredder bin and never ever see the light of day.

Shame that the once proud and pioneering Greens voice has all but disappeared under the Labor communication blanket. As a former advertiser, Slick Nick should understand the concept of ‘product differentiation’ - where did it go, Nick??

Posted by Merk on 13/05/11 at 08:46 PM

For the cynics, there was a time when Jim Bacon, Paul Lennon and the Tasmanian “kulture” refused to even conduct tenders. The Transport building was sold for $100K without tender. Open your eyes and ears and appreciate the change. I’m with #2 where a professional business might even win the tender but am not yet convinced the deck is stacked. It is a positive step forward and the critics should put a cork in it.

Posted by Mark on 13/05/11 at 09:33 PM

This announcement of a strategic review is years late, but it should be welcomed as an opportunity for a paradigm shift into sustainable forestry practices.

Any future model for FT should be based upon recognition that there is far more long-term value in protecting the bulk of our HCV forests in formal reserves. The opportunity for FT’s own salvation is actually staring them in the face right now, because the threat of climate change is generating an increasing worldwide appetite for purchasing carbon offsets. FT might become one of the first credible worldwide GBEs that can lease-back carbon-banks in protected forestry reserves, and backed by a state government certification.

In the short-term, this revenue would be generated through free-enterprise opportunities such as airline passengers purchasing carbon offsets for their flights. Increasingly, as more countries move to implement a carbon-trading economy, the opportunity would shift more towards industry seeking to offset their emissions. An emerging domestic and global marketplace for trading carbon offsets will inevitably see enormous growth in both demand and price over coming years.

The concept of leasing forest reserves on a “short-term” basis is essential so that the price can adjust to growing market-demand. Certainly some less contentious regrowth areas could also be reserved for long-rotation timber production cycles for sawmilling and speciality uses.

Of course, any mainstream politicians reading this proposal would ask “what about jobs?”. The answer is very simple, because the extra revenue for Tasmania can be used in all sorts of beneficial job creating ways (more doctors, nurses, teachers, police; whatever the community wants to spend the extra state revenue on).

You can call me a dreamer, but what an amazing turn-around it would be if Tasmanians could view FT as the steward of our forests and the friend of present day forest activists, within just the next few years!

Posted by Kev Rothery on 13/05/11 at 10:48 PM

#11 :) go merk!!!....

Posted by Dave Groves on 14/05/11 at 02:55 AM

You have to give the Tasmanian government credit for being up with the times. More than a generation ago, controversy raged in Queensland over the logging of North Queensland rainforests. The conflict over logging used up megalitres of ink in city papers, while in the forests themselves, environmentalists and loggers faced off against one another. Animosity and acrimony thickened the talkback airwaves. The state government, led by that old crook Joh B-P, tirelessly recited its mantra that the timber industry was, along with farming and mining, one of the three pillars of the Queensland economy. Without the millions in revenue it generated and the thousands of jobs it provided, the state would rapidly fall into irretrievable ruin. The timber industry was absolutely essential to the survival of the state (sound familiar?).

Then the Hawke federal government was elected. It quickly acted to sort out this mess, with one of its first moves being the commissioning of an independent audit of what exactly the timber industry contributed to the state. The findings? Rather than generate millions of dollars for the state’s economy, it actually cost the state millions in taxpayer subsidies, product sold below cost, and diversion of resources into a non-productive, in fact, counter-productive, industry. And rather than employ thousands, in reality it only employed a few hundred. All in all, the industry, rather than a pillar of the state’s economy, was a drag on it (again, sound familiar?).

So sawmillers were bought out, small towns in timber areas assisted to develop alternative sources of income, and timber-workers retrained for careers in more productive industries. What is North Queensland known for today and what has it grown rich on? Certainly not that that economically primitive activity of making stumps out of trees.

I suspect that were an honest audit of Tasmania’s timber industry to be held, the results would be much the same as that for Queensland, all those years ago. Perhaps it is time for the Tasmanian government, and that exemplary instance of agency capture, Forestry Tasmania, to stop trying to reinvent Joh’s square wheel.

Posted by L. Satterthwait on 14/05/11 at 03:42 AM

A statement has just come in from Furkestry Tasmurkistan….

“Here at FT we are committed to a broad framework of options streamlined within a volatile and demanding market place, fully intent on providing the very best opportunities for working Tasmanian families.

Unforseen circumstances, such as the GFC, rising dollar, earthquakes, tsunami’s, oil spills, fire in Queeny, silt in the Tamar, stolen ATM’s, long hair, early morning fog and the end of daylight saving have conspired to create challenging situations for our team of professionals.

We have suggested a “rearview” takes place and are working hard with the government to make this work as we intend.

For us, its business as usual, getting on with the hard job of guiding FT through the clearfell of opportunities that we still have left to burn in this state”.

And just in, a MR from the government of Tasmurkistan…..

Lavisha and Brain Green have secured funding amid tight budget constraints to create a pathway for Furkestry Tasmurkistan by commissioning and independent “rearview” of their operations.

Received 21 November 2008; accepted 23 November 2009. Available online 30 December 2009.

Abstract
Modern silvicultural treatments are based on single trees whereas classic forest economics look at the stand level. To accompany each other it is necessary to transfer the established economic models to the single tree level. This paper is an approach to use the Faustmann model and the corresponding marginal rate of return (Pressler percent) to derive value increment rates of single trees taking into account neighbourhood effects due to competition between individual trees. Furthermore, optimal rotation periods and optimal final diameters for future trees will be calculated.

Article Outline
Introduction
Aim and strategy
The soil expectation value as a valuation calculus
The optimization of the rotation period
Transition to the single tree level
Neighbours’ effects
Hypothesis and example
Evaluation of competition
Heights
Linear increment model
Using the model
Results
Value increment rate
Felling time
Conclusions
References

Fig. 1.
Graphical solution of Eq. (3). The abscissa shows the rotation period T in years, the ordinate the interest rate. The intersection of value increment rate and annuity factor (“profitability factor”) is at T0=TB′(T)=0.—————————————————————————Fig. 2.
Graphical solution of Eq. (3). Value increment rate (solid curve) and annuity factors (“profitability factors”) for different increment rates (dashed curves). The abscissa shows the rotation period T in years, the ordinate the interest rate.—————————————————————————
Fig. 3.
Temporal development of the value increment rate VIR of the single treatment variants during the years 2006–2036. The dashed lines represent the right side of Eq. (6), the required profitability; exemplarily for interest rates of 2% and 3%.—————————————————————————
Fig. 4.
Temporal development of the modified value increment rate mVIR of the single treatment variants during the years 2006–2036. Interest rate r=.03. The dashed line represents the right side of Eq. (6), the required profitability.—————————————————————————Fig. 5.
Optimal felling times of the different thinning variants. In addition the root mean square error se is shown.—————————————————————————Fig. 6.
Final DBH of the thinning variants, achieved during the optimal rotation period. In addition the root mean square error se is shown.—————————————————————————Table 1. Comparing the decision alternatives “growth” and “harvest” at stand and single tree level.

I don’t believe for a second that there is anyone in Tasmania capable of conducting a fair review of FT. Even Kim Booth would have Slick Nick looking over his shoulder with a red pencil ready to cut anything that might upset his Labor besties.

As the old saying goes “never hold an enquiry unless you already know the outcome”. This will be another whitewash - probably just a formality ahead of another big handout.

Posted by jabsert on 14/05/11 at 01:24 PM

“Forestry Tasmania operates in a very complex market and industry environment” Mr. Bryan Green said.
So when are you going to absolve yourself from this very complex portfolio? Michael Swanton.

Posted by Michael Swanton on 14/05/11 at 03:42 PM

#2 KPMG? The same KPMG that scored around $1.2 million in audit and consulting fees from Gunns, and $190,000 in internal audit fees from FT, in 2010?

Posted by Barbara Mitchell on 14/05/11 at 10:09 PM

#20 Exactly

Posted by john hawkins on 15/05/11 at 09:05 AM

#11. Michael Swanton, you are correct in your concerns as to the information being sought that will have an enormous impact on all of Tasmania’s forests.
The difficulty is in just how intensive will be the terms of reference provided in relation to the depth of the investigations into Forestry Tasmania?

Your point Michael Swanton, in questioning as to whom will hold the arbitrary authority or supervisory position to ensure all points of major concern are correctly addressed, is a very important question.
The name of this person whom will be appointed to this arbitrary role, which in the given powers as issued, will be the person overseeing the directional issues and outcomes of this said investigation, full review, and or in-depth inquiry as has been ordered.

There is the real prospect of some many innumerable failures and shortcomings that are suspected of being extant within the current and recent activities, that will be soon known, indeed any number of those failures, that could also bring into question the role played by its executive board?

At the end of the day and when all is set and done, it will fall back on just who is the ultimate responsible party of individuals whom control the levers that do directly instruct the management group heading this GBE of Forestry Tasmania?

There can be no argument that the over all responsibility must be held by said executive board members, this can be seen in the need, or even in the establishment of this executive board and of the remunerations so given for the duly expected performance of each of its directors?

I now arrive to the point where their must also be some form of investigation as to the actual role participated in by Tasmania’s forestry minister, Bryan Green, currently the State’s Deputy Premier?
There will be many citizens of this State who will demand some detailed account of this Deputy Premier’s actual activity and involvement in his forestry supportive role as has been displayed, toward all that Forestry Tasmania represents in its wide ranging sphere of operations.

I await with the usual degree of suspicion as to what will be made public as a result of such review or intensive investigations and audits and whatever else may or may not be revealed, at the pending conclusion of this vitally important moment in Tasmania’s times of financial crisis?

Posted by William Boeder on 15/05/11 at 12:14 PM

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